Why Nuro has quickly become one of the most well-funded autonomous-vehicle startups, raising $1.5 billion to compete in a crowded space already filled with heavy players

While some of Nuro's competitors in the autonomous-vehicle industry are building diverse business models that include a combination of ride-hailing, logistics, trucking, and deliveries, Nuro has kept its sights trained on deliveries since day one. That narrow focus has reduced the number of technological problems it has to solve to build a reliable automated-driving system, creating an easier path to scaling its business.

Transporting goods instead of people "makes so many things easier," said John Lilly, a partner at Greylock and a member of Nuro's board of directors.

And the delivery market looks like it will become a very lucrative opportunity for autonomous-vehicle companies. Baillie Gifford investment manager Chris Evdaimon believes the growth of e-commerce will eventually create more demand for deliveries than human drivers can handle.

"We were excited to see a company who from the beginning very unapologetically focused its entire business use-case on goods," Evdaimon said.

When looking at investment opportunities in the autonomous-vehicle industry, Greylock wanted to find a team that wasn't experimenting with automated-driving technology for the first time, Lilly said. After spending more than five years each working on self-driving cars at Google, Nuro cofounders Dave Ferguson and Jiajun Zhu weren't starting from scratch.

"We needed to find a team that was special and actually had miles driven," Lilly said. "Dave and JZ had already done that."

In addition to Ferguson's and Zhu's backgrounds, Evdaimon said he was impressed by their long-term perspective.

"We very much like to see founders who have the patience that it takes to build their companies," he said.

While the autonomous-vehicle industry has developed slowly, Nuro has already made impressive progress in its first five years, Lilly and Woven Capital managing director George Kellerman said. Lilly was "blown away" by the team Ferguson and Zhu had assembled and the technology the company had developed.

"They had achieved so much so quickly," said Lilly, who invested in 2017. 

Nuro has also developed a promising strategy to turn that technology into a viable business. Instead of launching an app and trying to get people to use it, like DoorDash or Grubhub, Nuro is focusing on becoming a delivery provider for companies that already have large customer bases, Kellerman said.

"That also allows them to really focus on the technology, the product, and the partnerships and not have to build a large, consumer-facing marketplace," he said.

Nuro has found success in attracting high-profile partners. Already, the company has signed deals with Walmart, CVS, Kroger, and Domino's Pizza.

"The fact that they have these partnerships in place will really help accelerate their ability to scale," Kellerman said.

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